Texas Real Estate Broker Exam — All Questions

A new environmental ordinance leaves a landowner with no economically viable use of a parcel, although the government takes no title to it. The owner's strongest constitutional claim is:

• a.The ordinance is void because zoning cannot restrict use
• b.A regulatory taking entitling the owner to payment✓
• c.Escheat has occurred and the state now owns the parcel
• d.Spot zoning, since only this parcel lost its value

Regulation that goes so far it denies an owner all economically viable use is treated as a regulatory taking, and just compensation is owed even though the government never took title. Arguing that zoning simply cannot restrict use fails, because regulating land is a valid exercise of the police power and owners have no right to the most profitable use. Escheat moves property to the state only when an owner dies with no will and no heirs, which has nothing to do with an ordinance. Spot zoning describes singling out one parcel for a different classification, not a general environmental rule applied to a class of land.

Reviewing a title report, a broker finds an old recorded covenant, written decades ago, that bars resale of the lot to members of a specified race. Its legal effect today is:

• a.It binds the buyer because it was recorded before purchase
• b.It is void, so a court will never enforce it or enjoin it✓
• c.It stays valid until the homeowners association removes it
• d.It is enforceable by the association but not by an owner

A private restriction that discriminates on a protected basis is void and unenforceable under the federal Fair Housing Act and the Civil Rights Act of 1866, so no court will order compliance or enjoin a violation, and the association has no power the courts would back. Recording rescues nothing, because an illegal restriction gains no force from sitting in the public record. No association vote is required to strip it of effect, although many states let an owner have the language formally struck. Valid CC&Rs, by contrast, are enforced privately by injunction brought by an owner or the association. A broker must never repeat or give effect to such language.

A grantor signs and notarizes a deed naming a nephew as grantee, locks it in a safe deposit box, and tells no one. The grantor later dies. What is the deed's effect?

• a.Title passed when the grantor signed the deed
• b.Title passed because the deed was acknowledged
• c.No title passed, because delivery never occurred✓
• d.Title passes when the estate later records it

A deed operates only when the grantor delivers it with the present intent to pass title and the grantee accepts, and both must happen while the grantor is alive. Signing accomplishes nothing while the instrument stays under the grantor's control in a box no one knows about. Acknowledgment before a notary serves recording, not validity, so notarizing it changes nothing here. An estate representative cannot supply the delivery the grantor failed to make, and recording an undelivered deed does not revive it. The nephew takes only through the will or the intestacy statute, which is why closings hand over the executed deed rather than merely signing it.

A deed is signed by a competent grantor and handed to a grantee who accepts it, but the grantor's signature was never notarized. As between those two parties, the deed is:

• a.Void, since notarizing is a validity requirement
• b.Valid, though it cannot be recorded as it stands✓
• c.Valid only if the grantee later pays a recording fee
• d.Voidable at the option of the grantor's creditors

Acknowledgment is a recording requirement, not an element of a valid deed. Delivered and accepted, the deed transfers title between grantor and grantee even with no notary, but the recorder will reject it, leaving the grantee exposed to later purchasers and lienholders who record first. Calling it void confuses the two ideas: validity turns on a competent grantor, an identifiable grantee, words of conveyance, an adequate legal description, the grantor's signature, and delivery and acceptance. Paying a fee cannot cure a missing acknowledgment, because the recorder cannot accept the instrument at all. Creditors of the grantor gain no power to undo a completed conveyance.

In a deed, which clause opens with the words 'to have and to hold' and defines the extent of the estate the grantee is receiving?

• a.The granting clause containing the words of conveyance
• b.The habendum clause, following the granting clause✓
• c.The acknowledgment taken before a notary public officer
• d.The legal description identifying the land conveyed

The habendum clause follows the granting clause, begins with the traditional phrase 'to have and to hold,' and spells out the estate conveyed, for example a fee simple absolute or a life estate. The granting clause holds the words of conveyance that actually transfer the interest and names the grantee. The acknowledgment is the notary's certificate that the signature is genuine, which the recorder requires but the transfer does not. The legal description identifies the land by metes and bounds, lot and block, or government survey, and it fixes what is conveyed rather than how much of an estate. Reading both clauses tells a broker exactly what the buyer is getting.

A relocation company that has owned a home for three months conveys it, warranting title only against defects that arose during its own ownership. The deed it delivers is a:

• a.Bargain and sale deed implying ownership without covenants
• b.General warranty deed covering the entire chain of title
• c.Quitclaim deed conveying only the interest actually held
• d.Special (limited) warranty deed covering the grantor's period✓

Warranting only against defects created or suffered while the grantor held title describes the special or limited warranty deed, the customary instrument for corporate, relocation, and fiduciary sellers who cannot vouch for what earlier owners did. A general warranty deed reaches back through the whole history of the property and offers the broadest protection, which is more than this seller is giving. A quitclaim carries no warranties at all and passes only whatever interest the signer happens to hold. A bargain and sale deed implies that the grantor owns the property but adds few or no covenants. A buyer taking narrower covenants should lean on an owner's title policy.

A title search shows that a seller's former spouse may still hold a possible interest in the property. What is the usual instrument used to release that interest and clear the record?

• a.A quitclaim deed from the former spouse✓
• b.A general warranty deed from the former spouse
• c.A trustee's deed issued after a foreclosure
• d.A correction deed fixing the legal description

A quitclaim releases whatever interest the signer may hold, with no warranties attached, which makes it the standard tool for removing a cloud such as a possible marital interest, a stale easement claim, or a name discrepancy. Demanding a general warranty deed asks the former spouse to guarantee title he or she may never have owned, and it is normally refused. A trustee's deed is what the trustee under a deed of trust issues to the purchaser at a foreclosure sale. A correction deed reforms a mistake in an earlier deed between the same parties and cannot release an outsider's claim.

A court-appointed personal representative sells a decedent's home during probate, and the buyer's broker asks what instrument will convey title. The answer is:

• a.A trustee's deed given after a nonjudicial foreclosure
• b.A sheriff's deed issued following a judicial sale
• c.A general warranty deed with full title covenants
• d.An executor's or personal representative's deed✓

Estate property is conveyed by an executor's deed when a will names the executor, or by a personal representative's or administrator's deed when the court makes the appointment; these deeds recite the court authority and give only limited covenants. A trustee's deed comes from the trustee under a deed of trust after a nonjudicial foreclosure sale. A sheriff's deed, called a referee's deed in some states, follows a judicial sale ordered by a court. A general warranty deed is not used, because a fiduciary will not personally guarantee title against the acts of the decedent or of owners further back in the chain.

After closing under a general warranty deed, a buyer discovers a recorded utility easement that the deed never disclosed. Which covenant did the grantor breach?

• a.Quiet enjoyment, a promise against eviction by better title
• b.Seisin, a promise that the grantor owns the estate conveyed
• c.Against encumbrances, a promise of no undisclosed burdens✓
• d.Further assurance, a promise to sign curative papers

The covenant against encumbrances promises that no liens, easements, or similar burdens exist beyond those the deed discloses, so a recorded easement left unmentioned breaches it at the moment of delivery. Seisin promises the grantor actually owns the estate being conveyed, which is not the trouble when ownership is sound but burdened. Quiet enjoyment shields the grantee from later eviction by someone holding superior title, and an easement holder's use is not an eviction. Further assurance obliges the grantor to sign additional documents needed to perfect title. A general warranty deed carries all of these along with the right to convey and warranty forever.

A neighbor has openly farmed and fenced a strip of an absentee owner's land, excluding others and never asking permission. To take title by adverse possession the neighbor must prove:

• a.Payment of the owner's property taxes for every year
• b.Open, notorious, continuous, hostile, and exclusive possession✓
• c.A written agreement signed by the record title owner
• d.A recorded deed describing the disputed strip of land

Adverse possession requires possession that is open and notorious, continuous, hostile in the sense of being without permission, and exclusive, held for the statutory period set by state law. Some states add payment of taxes or color of title, but those elements are not universal, so a broker should never assume them from another state's rule. A written agreement from the record owner would destroy the claim outright, since permission defeats hostility. Recording a deed creates no possession and cannot manufacture the required years of use. Adverse possession is one form of involuntary alienation, alongside descent, escheat, foreclosure, eminent domain, and accretion.

An owner dies leaving no will, and after a diligent search no heirs can be located. A broker asked to list the property should understand that title:

• a.Passes by devise to the beneficiaries named in a will
• b.Descends to the decedent's nearest surviving creditors
• c.Vests permanently in the administrator the court appoints
• d.Escheats to the state, an involuntary transfer of title✓

Escheat is the state's claim to property when an owner dies intestate and no heirs can be found, and it is a classic involuntary transfer rather than a voluntary one by deed or will. Devise is a gift of real property by will, so it cannot operate where there is no will and no named beneficiary. Descent carries property to heirs under the intestacy statute, but creditors are paid as claimants out of the estate and never inherit the land itself. An administrator has authority to manage and convey estate property during probate, not to own it permanently. Each state sets its own escheat procedure and waiting period.

A search reveals an old mortgage of record that was paid off but never released, and the lender no longer exists. Which step clears that cloud so title is marketable?

• a.Ordering an abstract of title with an attorney's opinion
• b.Buying an owner's title policy that insures over it
• c.Filing a quiet title action asking a court to clear it✓
• d.Recording a correction deed signed by the current seller

A quiet title action asks a court to determine ownership and extinguish a stale or unreleasable claim, which is the practical cure when the mortgagee has vanished and no release can be obtained. An abstract of title with an attorney's opinion summarizes and evaluates the recorded chain; it reports the cloud rather than removing it, and it offers no indemnity. An owner's policy may insure over a known risk, but insurance pays for loss and leaves the defect on the record for the next buyer to confront. A correction deed fixes a drafting error between the original parties and cannot release a third party's lien.

A seller deeds a parcel to one buyer and later deeds the same parcel to a second buyer, who records first. Which framework decides who owns the land?

• a.A federal recording statute applied in all fifty states
• b.The state's recording act, race, notice, or race-notice✓
• c.The order in which the two deeds were signed and dated
• d.The county recorder's discretion over competing claims

Priority between competing grantees is governed by the recording act of the state where the land lies, and the schemes differ: a pure race state protects whoever records first, a notice state protects a later purchaser who took without notice of the earlier deed, and a race-notice state protects one who took without notice and recorded first. No federal statute governs land recording. Signing dates do not decide the contest, which is precisely why a public recording system exists. Recorders act ministerially and have no power to resolve claims. Because the gap between closing and recording is the danger zone, a broker should press for prompt recording.

A buyer pays for a lender's title policy at closing and asks the broker whether it also protects the buyer's equity in the home. The correct answer is that the policy:

• a.Protects both parties equally up to the full purchase price
• b.Protects the buyer once the mortgage has been fully repaid
• c.Protects the buyer against defects arising after closing
• d.Protects only the lender, declining with the balance✓

A lender's, or mortgagee's, policy insures only the lender's security interest, and its coverage shrinks as the principal is paid down, ending altogether when the loan is satisfied. It never covers the buyer's equity, which is why a separate owner's policy is offered at closing for a one-time premium and lasts as long as the insured holds an interest. Repaying the mortgage does not convert the lender's coverage into the buyer's; it extinguishes it. And no title policy insures defects that first arise after its date. Brokers should explain this plainly before a buyer waives owner's coverage to save money.

Six months after closing, a contractor the buyer hired records a mechanic's lien against the home. The buyer files a claim under the owner's title policy. The insurer will most likely:

• a.Deny, because the defect arose after the policy was issued✓
• b.Pay, because owner's policies cover all future liens
• c.Pay, because the standard exceptions were removed
• d.Deny, because only a lender may file a title claim

Title insurance looks backward: it covers defects that already existed when the policy was issued but were not discovered or excepted, not events that happen later. A lien for work the buyer ordered after closing is a new problem the buyer must resolve directly. Buying extended coverage removes standard exceptions and broadens what is insured as of the policy date, but it does not push coverage forward in time. Owners plainly may claim under their own policies; the lender's policy is the one limited to the lender. Extended coverage typically depends on a current survey, which reveals encroachments and boundary issues a records search alone cannot.

A buyer tours a house and finds an occupant who is not the seller living there under an unrecorded lease. What kind of notice does that occupancy give the buyer?

• a.Actual notice, given by the seller's written disclosure
• b.Constructive notice, given by the public record
• c.No notice at all, since the lease was not recorded
• d.Inquiry notice, requiring the buyer to ask about it✓

Someone in possession who is not the seller puts a buyer on inquiry notice: the buyer is charged with whatever a reasonable investigation of that occupancy would have turned up, including an unrecorded lease or an option to purchase. Actual notice is what a party genuinely knows, typically from a disclosure or a conversation, and no one has told this buyer anything. Constructive notice comes from the public record, which by definition cannot reveal an unrecorded lease. Treating an unrecorded interest as invisible is the classic error, because possession is itself notice. A broker should always ask who occupies a property and on what terms.

How is the Texas Real Estate Commission itself made up?

• a.Seven members appointed by the Texas Association of Realtors
• b.Nine licensed brokers elected by Texas license holders every six years
• c.Nine members appointed by the governor: six brokers, three public✓
• d.Five members serving inside the Texas Department of Licensing

Occupations Code § 1101.051(a): "The Texas Real Estate Commission consists of nine members appointed by the governor with the advice and consent of the senate as follows: (1) six members who have been engaged in the brokerage business as licensed brokers as their major occupation for the five years preceding appointment; and (2) three members who represent the public." Nobody is elected to it, and the three public seats exist so that the regulated trade does not hold every vote — an all-broker commission is the arrangement the statute deliberately does not create. A trade association appoints no one either: the Texas Association of Realtors is a private membership body, and TREC is the state agency TRELA charges with licensing. Nor is TREC a program inside the Texas Department of Licensing and Regulation, which administers other occupational licenses; TREC is created by and answers to Chapter 1101 itself.

The Texas Real Estate Broker-Lawyer Committee, which drafts the promulgated contract forms, consists of:

• a.Nine members, all of them appointed by the Real Estate Commission
• b.Thirteen members: six from TREC, six from the State Bar, one public✓
• c.Thirteen members, each of whom is a licensed Texas attorney
• d.Seven members appointed by the Supreme Court of Texas

Occupations Code § 1101.252(a): "The Texas Real Estate Broker-Lawyer Committee consists of 13 members appointed as follows: (1) six members appointed by the commission; (2) six members of the State Bar of Texas appointed by the president of the state bar; and (3) one public member appointed by the governor." TREC's own page says the same: "It consists of six members appointed by the Commission, six members appointed by the State Bar of Texas, and one public member appointed by the Governor's Office." So the Commission does not fill the committee by itself — it fills fewer than half the seats, which is the point of a body that puts brokers and lawyers in the same room. Nor are all thirteen lawyers: only the six State Bar seats are, and the public member is by design neither a lawyer nor a broker. The Supreme Court of Texas has no appointment at all; the appointing authorities are the commission, the president of the state bar and the governor.

A buyer wins a judgment against a Texas broker for fraud and cannot collect it. Payments from the Real Estate Recovery Trust Account are capped at:

• a.$50,000 for a single transaction and $100,000 for one license holder
• b.$20,000 for a single transaction, with no ceiling per license holder
• c.The whole unpaid judgment, because the account carries no ceiling
• d.$125,000 for a single transaction and $250,000 for one license holder✓

Occupations Code § 1101.610(a): "Payments from the trust account for claims, including attorney's fees, interest, and court costs, arising out of a single transaction may not exceed a total of $125,000, regardless of the number of claimants," and (b) caps payments on judgments against a single license holder at "a total of $250,000 until the license or certificate holder has reimbursed the trust account." TREC's own guidance publishes the same pair of figures. The lower numbers are not the current caps, and no version of the subchapter has ever left the per-license-holder side uncapped. The account also never simply pays a judgment out: it is a fund of last resort reached only after final judgment, execution returned nulla bona and a perfected judgment lien under § 1101.606(a), and § 1101.610(c) makes the court reduce claims proportionately once they exceed these limits. Section 1101.610(e) adds that a business entity and its designated broker count as a single license holder for the $250,000 ceiling.

Which of these people needs a Texas real estate license?

• a.An on-site manager of an apartment complex leasing units there
• b.An auctioneer selling real estate at auction and doing nothing more
• c.A residential rental locator paid to find tenants an apartment✓
• d.An attorney licensed in Texas handling a client's purchase of land

Occupations Code § 1101.351(a): "Unless a person holds a license issued under this chapter, the person may not: (1) act as or represent that the person is a broker or sales agent; or (2) act as a residential rental locator." The locator is named in the licensing statute itself, so the fee-for-finding-a-tenant work is licensed activity. The other three are carved out of the chapter entirely by § 1101.005, which says "This chapter does not apply to: (1) an attorney licensed in this state ... (4) an auctioneer licensed under Chapter 1802 while conducting the sale of real estate by auction if the auctioneer does not perform another act of a broker ... (7) an on-site manager of an apartment complex." Note how narrow the auctioneer's exemption is — it survives only while the auctioneer does nothing else a broker would do.

For a broker application filed in 2026, TREC's experience rule requires the applicant to document:

• a.720 qualifying experience points and four years of active licensure✓
• b.360 qualifying experience points and two years of active licensure
• c.Twenty closed transactions within the twelve months before applying
• d.No experience at all, if the applicant holds a bachelor's degree

22 TAC § 535.56(b): "An applicant for a broker license must demonstrate not less than 720 points of qualifying practical experience," reported on TREC No. BL-A. The years come from the same subsection and Occupations Code § 1101.356(a)(1): "at least four years of active experience as a license holder during the 60 months preceding the date the application is filed." 360 points was the earlier floor and is the figure most secondhand study material still carries, but it no longer states the rule; the four-of-five-year requirement is the part that did not change. Counting closings in a single year states the wrong measure altogether — points accrue across the qualifying period, and § 535.56(b) separately requires at least one transaction per year in four of the five years. A degree helps, but on the education side only: § 535.56(a) deems it to satisfy 300 classroom hours of the related-education requirement, and it touches neither the points nor the years.

A Texas limited liability company wants to hold a broker license. TRELA requires the entity to:

• a.Designate a managing officer who holds an active individual broker license✓
• b.Designate any sponsored sales agent with four years of experience
• c.Name a second licensed business entity to act as its designated broker
• d.Register with the secretary of state in place of holding a license

Occupations Code § 1101.355(a)(1) requires a business entity to "designate one of its managing officers as its broker for purposes of this chapter," and (b) adds that the entity "may not act as a broker unless the entity's designated broker is a licensed individual broker in active status and good standing according to the commission's records." Experience is not the qualification in question: however seasoned, a sales agent does not hold a broker license, and 22 TAC § 535.53 repeats that the entity must designate "an individual holding an active Texas real estate broker license in good standing." That word individual also rules out stacking entities — TREC's guidance states plainly that "the designated broker acting as a general partner must be an individual, not another business entity." And a filing with the secretary of state creates the company without conferring any brokerage authority; § 1101.351(a-1) bars an unlicensed business entity from acting as a broker. Section 1101.355(a)(2) adds errors-and-omissions cover of at least $1 million per occurrence where the designated broker owns less than 10 percent of the entity.

A Texas broker renewing a license must complete continuing education of:

• a.Fifteen hours, of which eight must be legal update coursework
• b.Eighteen hours including legal update, contracts and broker responsibility✓
• c.Thirty hours, matching the length of a qualifying course
• d.Eighteen hours chosen freely from Commission-approved electives

22 TAC § 535.92(a): "18 hours of continuing education are required for each renewal of a real estate sales agent or broker license and must include: a four-hour Legal Update I: Laws, Rules and Forms course; a four-hour Legal Update II: Agency, Ethics and Hot Topics course; three hours on the subject of real estate contracts from one or more Commission approved courses; and a six-hour Broker Responsibility Course, if the license holder: is a broker; or is a delegated supervisor." For a broker those four blocks account for 17 of the 18 hours, so the choice is nearly all made for them — which is why an all-elective answer is wrong even though it names the right total. Fifteen hours understates the requirement, and thirty is the minimum length of a qualifying course accepted for elective credit under § 535.92(c), not a renewal obligation. The broker responsibility element is now statutory as well: Occupations Code § 1101.458(a), as amended effective 1 January 2026, requires the course of every broker and of a sales agent who supervises another license holder.

Under the TREC Canons of Professional Ethics and Conduct, a license holder acting as an agent for another must:

• a.Place no personal interest above the interest of the client✓
• b.Obtain the best price for whichever party is paying the commission
• c.Treat the client and the other party as equally owed loyalty
• d.Decline any transaction in which the other party is unrepresented

22 TAC § 531.2 (Fidelity) says a license holder acting as an agent for another is a fiduciary, and the special obligations "demand: that the primary duty of the license holder is to represent the interests of the client ... that, however, the license holder, in performing duties to the client, shall treat other parties to a transaction fairly ... and that the license holder place no personal interest above that of the client." Loyalty is fixed by who is represented rather than by who pays: Occupations Code § 1101.557(a) makes the broker the agent of the party represented, and a seller-paid fee does not make the buyer's broker the seller's agent. The canon also draws a line the third answer erases — fairness is owed to the other party, loyalty is not, and treating the two as the same duty would leave the client with nothing distinctive. Nothing bars working opposite an unrepresented party either; § 1101.558(b-1)(3), as amended effective 1 January 2026, now requires the written notice to describe what a broker owes a party it does not represent.

SB 1968 added a new ground for discipline to TRELA effective 1 January 2026. It is failing to:

• a.Register a team name with the Commission before using it in an advert
• b.Deliver the IABS notice to prospects at a public open house
• c.Notify the Commission of a felony conviction within thirty days
• d.Enter into a written agreement with a prospective buyer✓

Occupations Code § 1101.652(b)(34), added by SB 1968 (89th Legislature) section 11: the commission may act where a license holder "fails to enter into a written agreement with a prospective buyer as required by Section 1101.563." It sits in subsection (b), the list of grounds for conduct "while engaged in real estate brokerage," immediately after (b)(33). The felony-notification ground is real but is not new — it is § 1101.652(a)(7), which has long required notice "not later than the 30th day after the date of a final conviction." Team-name registration is a rule requirement under 22 TAC § 535.154 and is enforced through the existing advertising ground at § 1101.652(b)(23), not through anything SB 1968 wrote. And no IABS notice is owed at an open house at all: § 1101.558(c)(3) removes the duty there, so a failure that cannot occur cannot have become a ground for discipline.

A buyer instructs her agent in writing to strike a sentence from a promulgated contract form. Under the TREC rules the agent:

• a.Must refuse, because altering a promulgated form is practicing law
• b.May strike it if the deletion is made conspicuous, e.g. by striking through✓
• c.May strike it once the seller's broker has approved the change
• d.May instead rewrite the sentence to say what the buyer wants

22 TAC § 537.11(d)(2) says it is not the practice of law for a license holder to, "if specifically instructed in writing by a principal, add language to or strike language from a contract form, as long as any change is made conspicuous, including underlining additions, striking through deletions, or employing some other method which clearly indicates the change being made." A blanket refusal therefore overstates the rule. What the rule does forbid is the license holder supplying the words: § 537.11(b)(5) bars drafting or recommending "language to be included in a contract form defining or affecting the rights, obligations, or remedies of the principals ... including escalation, appraisal, or contingency clauses," which is exactly what rewriting the sentence would be. And the other side's broker is not the source of the authority: it comes from the agent's own principal's written instruction, and the seller still has to agree to the changed terms as a matter of contract, not of approval.

A sales agent takes a buyer's earnest money check on Friday afternoon. Under the TREC trust-money rule:

• a.The agent may hold it in her own trust account until closing
• b.The agent must deliver it to her sponsoring broker immediately✓
• c.The agent must forward it to the escrow agent within five working days
• d.The agent must deposit it in the brokerage operating account by Tuesday

22 TAC § 535.146(b)(2): "A sales agent shall not maintain a trust account. Any trust money received by a sales agent must be immediately delivered to the sales agent's sponsoring broker." So an agent's own trust account is the one arrangement the rule forbids outright. The operating account is worse: § 535.146(b)(5) makes "placing trust money in a broker's personal or operating account" prima facie evidence of commingling. The deadline attaches to the broker rather than the agent — § 535.146(b)(3) gives the broker until "not later than the close of business of the second working day after the date the broker receives the trust money" to deposit it or deliver it to an authorized escrow agent, unless the principals agree otherwise in writing — so a five-working-day answer states a longer period than the Commission has allowed and puts the clock on the wrong person.

A Texas broker wants to pay part of a commission to a broker licensed in Oklahoma who referred the buyer. This is:

• a.Permitted, if the Oklahoma broker conducted no negotiations in Texas✓
• b.Permitted, once the Oklahoma broker registers the fee with TREC
• c.Prohibited, because a commission may go only to a Texas license holder
• d.Prohibited, unless the seller consents to the split in writing

Occupations Code § 1101.651(a): "A licensed broker may not pay a commission to or otherwise compensate a person directly or indirectly for performing an act of a broker unless the person is: (1) a license holder; or (2) a real estate broker licensed in another state who does not conduct in this state any of the negotiations for which the commission or other compensation is paid." A flat Texas-only rule therefore reads subdivision (2) out of the statute, and 22 TAC § 535.4(b) confirms the section "does not prohibit cooperative arrangements between foreign brokers and Texas brokers." The condition the statute imposes is about where the negotiating happened, not about paperwork, so there is no fee to register with the Commission. And the seller's consent is directed at a different question: § 1101.651(a) governs who may lawfully be paid, while § 1101.652(b)(8) is what requires all parties' knowledge and consent before a license holder takes compensation from more than one of them.

A Texas sales agent wants to rebate part of her commission to the buyer she represents. She:

• a.May not, because a rebate to a party is an undisclosed commission
• b.May, provided the rebate is never mentioned in any advertisement
• c.May, with the written consent of her sponsoring broker and the buyer✓
• d.May only if the rebate is paid after closing by the title company

22 TAC § 535.147(d): "A license holder may rebate or pay a portion of the license holder's fee or commission to a party in the transaction when the sales agent has the written consent of the sales agent's sponsoring broker and the party represented by the license holder." Calling that an undisclosed commission inverts the rule: § 535.148(a) is about taking a fee "from a person other than the person the license holder represents" without telling the client, which is money flowing the other way. Advertising a rebate is allowed too — TREC's guidance is that the advertisement must disclose any restrictions and, where the rebate goes to a party the license holder does not represent, that it is subject to that party's consent. The rule turns on consent rather than on who writes the check or when, though the same subsection bars paying a rebate "in a manner that misleads a broker, lender, title company, or governmental agency."

A sponsored sales agent puts her team name on a billboard. The TREC advertising rule requires the broker's name to appear:

• a.In the same size as the team name, anywhere on the billboard
• b.Only where the team name does not itself include the broker's name
• c.In at least half the size of the largest contact information✓
• d.In the smallest print used, so that the team name stays the focus

22 TAC § 535.155 requires each advertisement to include, in a readily noticeable location, "the name of the license holder or team placing the advertisement; and the broker's name in at least half the size of the largest contact information for any sales agent, associated broker, or team name contained in the advertisement." Equal size is more than the rule asks, and putting it anywhere drops the separate requirement that the placement be readily noticeable. The obligation is unconditional, so it does not switch off according to what the team name happens to contain; § 535.154 governs what a team name may be in the first place. Deliberately shrinking the broker's name is the failure the rule exists to prevent: Occupations Code § 1101.652(b)(23)(C) makes disciplinable an advertisement that "implies that a sales agent is responsible for the operation of the broker's real estate brokerage business."

A Texas broker holding a buyer's earnest-money deposit must:

• a.Deposit it into the brokerage operating account to earn interest
• b.Hand it to the seller as soon as the contract is signed
• c.Keep it apart from the broker's own money and not convert it✓
• d.Divide it with the sponsored agent as that agent's commission

A broker who holds client money such as earnest money must keep it separate from the broker's own funds and must not commingle or convert it. 22 TAC § 535.146(b)(4) forbids the broker to "commingle trust money with the broker's personal money or other non-trust money" or to "deposit or maintain trust money in a personal account or any kind of business account," and (b)(5) makes placing trust money in the operating account prima facie evidence of commingling — so running it through the firm's account is the violation however the entry is labeled, and earning interest for the firm on someone else's deposit compounds it. Handing it straight to the seller gives away money whose destination still depends on performance of the contract; § 535.146(d)(1) permits disbursement only "in accordance with the agreement under which the money was received." Treating it as the agent's commission takes as pay what belongs to a party. Where a deposit is disputed, § 535.146(d)(5) lets the broker interplead the parties rather than decide between them.

Under Texas advertising rules, a sponsored sales agent generally must:

• a.Advertise as a business independent of the sponsoring broker
• b.Leave the broker's name out of the advertisement entirely
• c.Confine advertising to television and radio broadcasts
• d.Advertise truthfully and under the sponsoring broker's name✓

Texas advertising rules require truthful, non-misleading advertising that identifies the broker, so a sponsored sales agent advertises under the sponsoring broker's name and may not imply that she operates independently of that broker. Occupations Code § 1101.652(b)(23) makes disciplinable an advertisement that "implies that a sales agent is responsible for the operation of the broker's real estate brokerage business" or "fails to include the name of the broker for whom the license holder acts." An advertisement presenting the agent as a separate business does the first of those, and one naming no broker does the second, leaving the consumer unable to tell who stands behind the representation. The rule governs content rather than medium: 22 TAC § 535.155 defines an advertisement to include "all publications, brochures, radio or television broadcasts, all electronic media including email, text messages, social media, the Internet, business stationery, business cards, displays, signs and billboards," so the same standards follow the advertisement everywhere. The broker is responsible for the firm's advertising, including that of sponsored agents — 22 TAC § 535.2(g).

Since 1 January 2026, when must a Texas license holder have a written agreement with a prospective buyer in place?

• a.Before making a written offer on any property, residential or not
• b.Before the buyer's first substantive communication with the broker
• c.Within three days after the buyer's first showing appointment
• d.Before showing the buyer any residential real property✓

Occupations Code § 1101.563(b), added by SB 1968 and effective 1 January 2026: a license holder who performs any act of real estate brokerage for a prospective buyer of residential real property "must enter into a written agreement with the prospective buyer before: (1) showing any residential real property to the prospective buyer; or (2) if no residential real property will be shown, presenting an offer to purchase residential real property on behalf of the prospective buyer." The offer is the fallback trigger for the case where nothing is shown, not the general rule, and the duty is confined to residential real property, which § 1101.563(a) defines as a single-family house, a duplex, triplex or quadraplex, or a condominium or co-operative unit — a commercial purchaser is outside it. The first-substantive-communication clock belongs to a different document, the written notice required by § 1101.558(b-1). And there is no grace period after a showing, because the agreement has to exist before the showing happens; failing to enter into it is now its own ground for discipline under § 1101.652(b)(34).

A Texas broker agrees to represent both the seller and the buyer in one sale. TRELA requires the broker to:

• a.Act as intermediary, with written consent from each of the parties✓
• b.Withdraw from one side and refer that party to another brokerage
• c.Obtain oral consent from both parties before the offer is written
• d.Appoint one associated license holder to advise both of the parties

Occupations Code § 1101.561(b): "A broker must agree to act as an intermediary under this subchapter if the broker agrees to represent in a transaction: (1) a buyer or tenant; and (2) a seller or landlord." Section 1101.559(a) then sets the conditions: the broker "obtains written consent from each party for the broker to act as an intermediary" and that consent "states the source of any expected compensation." Withdrawal is therefore not required and not the design — the intermediary structure exists precisely so one firm can hold both sides. Oral consent will not do, because the statute names writing; § 1101.559(b) treats a written listing or buyer representation agreement as sufficient consent where it "specifies in conspicuous bold or underlined print the conduct that is prohibited under Section 1101.651(d)." And putting a single associated license holder on both sides defeats § 1101.560, which appoints one license holder to communicate with and advise each party separately.

A seller's broker receives a low offer he is confident the seller will reject. Under TRELA he:

• a.Must inform the seller of the offer and present it to the seller✓
• b.May screen it out if the listing sets a minimum acceptable price
• c.Must present it only if the buyer's broker demands that in writing
• d.May hold it until a better offer arrives and present them together

Occupations Code § 1101.557(b) says a broker who represents a party "must inform the party if the broker receives material information related to a transaction to list, buy, sell, or lease the party's real estate, including the receipt of an offer by the broker" and "shall, at a minimum, answer the party's questions and present any offer to or from the party." The words at a minimum make this a floor the listing agreement cannot bargain below, so a stated minimum price does not license the broker to screen offers out — it is the seller who decides what to do with a low offer. Nothing conditions the duty on a demand from the other side, because it is owed to the broker's own client rather than to the buyer's broker. And holding the offer back to pair it with a better one withholds exactly the material information the same subsection requires be passed on, and it does so at the moment the seller could still act on it.

A Texas broker sues a seller for an unpaid commission on an oral listing. The action fails because TRELA requires:

• a.The listing to have been filed with the Commission before the sale
• b.The promise to be in writing and signed by the party being sued✓
• c.The broker to have been the procuring cause of the completed sale
• d.The seller to have accepted a full-price offer from a ready buyer

Occupations Code § 1101.806(c): "A person may not maintain an action in this state to recover a commission for the sale or purchase of real estate unless the promise or agreement on which the action is based, or a memorandum, is in writing and signed by the party against whom the action is brought or by a person authorized by that party to sign the document." Nothing is filed with TREC to make a commission agreement enforceable — the Commission licenses and disciplines; it does not record private contracts. Procuring cause and a full-price offer are arguments about whether a commission was earned under an agreement, and neither is ever reached here, because § 1101.806(c) stops the action at the threshold when there is no signed writing to sue on. Note where Texas puts this rule: Business and Commerce Code § 26.01(b) lists "a contract for the sale of real estate" but not a real-estate commission agreement, which TRELA handles instead.

Which task may a broker's unlicensed assistant lawfully perform in Texas?

• a.Host an open house at a listed property on the broker's behalf
• b.Address and post letters the broker has written and approved✓
• c.Answer a caller's questions about a listing's condition and price
• d.Unlock a listed house so a prospective buyer can walk through it

22 TAC § 535.4(c): "Unless otherwise exempted by the Act, a person must be licensed as a broker or sales agent to show a property. For purposes of this section, to 'show' a property includes causing or permitting the property to be viewed by a prospective buyer or tenant, unlocking or providing access onto or into a property for a prospective buyer or tenant, and hosting an open house at the property." Hosting the open house and unlocking the door for a buyer are each named in that sentence, so each requires a license. Fielding a caller's questions about a listing's condition and price is negotiating and advising about specific real property, and TREC's guidance is flat: "An unlicensed person may not engage in any activity for which a license is required. [TRELA § 1101.002(1) and Rules 535.4 and 535.5]." Clerical work that the license holder has already done the substantive part of is not on the list — posting letters the broker wrote and approved involves no showing, no negotiating and no advising, and the broker remains responsible for the content under 22 TAC § 535.2.

In Texas, a sales agent may perform licensed real estate activity:

• a.Independently once the license is active
• b.For any broker who pays the highest commission on a given deal
• c.Only for and in the name of the broker who sponsors the agent✓
• d.Only after obtaining a separate court appointment

A Texas sales agent must be sponsored by a broker and may act only for and in the name of that sponsoring broker, who is answerable for how the agent's licensed work is carried out. That is the central difference from the broker license: an active license does not by itself let the agent operate as an independent business. Nor does the agent pick whose name to work under deal by deal, because the sponsorship relationship, and not the size of the fee offered on a particular transaction, settles who the agent acts for and who answers for the work. The authority to practice comes from the license and the sponsorship, which is an administrative matter; no court order or appointment plays any part in it.

A Texas broker who sponsors sales agents is responsible for:

• a.Supervising the agents' transactions, advertising and client money✓
• b.Personally attending every showing and inspection the agents hold
• c.Paying the income taxes owed on the agents' commissions
• d.Guaranteeing that each listing the firm takes eventually sells

A sponsoring broker is responsible for the acts of sponsored agents and must maintain written policies covering their work. 22 TAC § 535.2(a) says that "unless such scope is limited or revoked in writing, a broker is responsible for the authorized acts of the broker's sales agents," (c) makes the broker "responsible for the proper handling of trust funds placed with the broker," and (g) makes the broker "responsible to ensure that a sponsored sales agent's advertising complies" with the advertising rules. The same rule settles the second answer expressly: the broker "is not required to supervise the sales agents directly," and adequate supervision is a matter of policies, records and review rather than attendance at every showing, which no firm of any size could sustain. The duty reaches the agents' licensed conduct, not their private finances, so their income tax remains their own. And it is a duty of process rather than of outcome — nothing obliges a broker to deliver a sale, because whether a listing sells turns on the market and the parties.

The Information About Brokerage Services (IABS) notice in Texas must be provided:

• a.Only at the closing table, together with the rest of the transaction paperwork
• b.Within 30 days after the transaction has closed and been funded
• c.Only when the party requests a copy of the notice from the license holder
• d.At the first substantive communication with a party about a property✓

Texas ties this notice to a party, not to a client. Occupations Code § 1101.558(b-1) requires a license holder, "at the time of a license holder's first substantive communication with a party relating to a proposed transaction regarding specific real property," to provide written notice in at least a 10-point font. A party includes someone who never becomes the license holder's client, so a buyer's agent still owes the notice to an unrepresented seller he contacts directly. As amended by SB 1968 effective 1 January 2026 the notice must carry four things, not three: it "(1) describes the ways in which a broker can represent a party to a real estate transaction, including as an intermediary; (2) describes the basic duties and obligations a broker has to a party ... that the broker represents; (3) describes the basic obligations a broker has to a party ... that the broker does not represent; and (4) provides the name, license number, and contact information for the license holder and the license holder's supervisor and broker, if applicable." TREC's revised IABS 1-2 form carries the added item. Because the whole value of the notice is reaching the consumer before they begin relying on the license holder, handing it over at closing, or after the transaction has ended, delivers it long after every decision it was meant to inform. Nor is it supplied on request: the duty rests on the license holder and cannot wait for a consumer with no reason to know the notice exists. It is informational and does not by itself create a representation agreement, and § 1101.558(c)(3) removes the duty at an open house.

When a Texas broker represents both the buyer and the seller in the same transaction, Texas law describes the broker's role as a(n):

• a.Dual agent
• b.Subagent
• c.Facilitator with no duties
• d.Intermediary✓

Texas does not use the term 'dual agency.' When a broker represents both parties in one transaction, the broker acts as an intermediary. That requires written consent from both parties in their representation agreements, and the broker may appoint different associated license holders to advise each party, with confidential information kept from crossing the transaction. Subagency described a different arrangement altogether, one licensee working through and for another party's broker rather than a single broker holding representation agreements with both sides; note that SB 1968 repealed the TRELA definition of subagent effective January 1, 2026, so it is no longer a Texas brokerage status and cannot be the answer to a current-law question. And the role is not a duty-free go-between: the intermediary still owes the parties the obligations those written agreements create, including impartiality and the protection of each side's confidences.

In a Texas intermediary transaction, an appointed license holder must:

• a.Refuse to communicate with either party
• b.Reveal the seller's lowest acceptable price to the buyer during negotiations
• c.Represent both parties equally in all confidential matters
• d.Keep each party's confidential information from the other side✓

In an intermediary transaction, the intermediary and any appointed license holders must remain impartial and must not disclose confidential information, such as the price or terms a party will accept, to the other side. Volunteering the seller's lowest acceptable price is precisely the disclosure the rule forbids, since it hands one party the other's negotiating position. Treating confidences as something shared equally with both sides misreads the structure, because appointment exists so that each party can receive advice from a separate associated license holder while what each says in confidence stays with that appointee. Nor does the role call for silence: the appointed license holder is there to communicate with and advise the party appointed to, within those limits.

When may a Texas license holder use a contract form other than the one TREC promulgates for that transaction?

• a.When the buyer and seller both sign a waiver of the promulgated form
• b.When the license holder's broker keeps a copy of the substitute form
• c.When the property owner requires a form drafted by an attorney✓
• d.When the sale will close without a lender or a title company

22 TAC § 537.11(a) requires mandatory-use forms "with the following exceptions: transactions in which the license holder is functioning solely as a principal, not as an agent; transactions in which an agency of the United States government requires a different form to be used; transactions for which a contract form has been prepared by the property owner or prepared by an attorney and required by a property owner; or transactions for which no contract form has been approved for mandatory use by the Commission." Occupations Code § 1101.155(b) says the same at statute level. The exceptions are drawn by who prepared the form and who requires it, so the parties cannot waive the requirement between themselves — the rule exists to protect them from a license holder drafting instruments. Keeping a copy is a records duty under 22 TAC § 535.2(h), not an authorization to depart from the form. And how the sale is financed or closed has nothing to do with which form is mandatory.

Business and Commerce Code § 26.01, the Texas statute of frauds, makes which of these unenforceable unless it is written and signed?

• a.An oral lease of commercial space for a term of three years✓
• b.An oral month-to-month lease of a single-family house
• c.An oral agreement between two brokers to split a commission
• d.An oral agreement to pay a broker a fee for finding a tenant

Section 26.01(a) makes a listed promise "not enforceable unless the promise or agreement, or a memorandum of it, is (1) in writing; and (2) signed by the person to be charged," and (b)(5) lists "a lease of real estate for a term longer than one year." A three-year lease is longer than a year and falls squarely inside it, whether the space is commercial or residential. A month-to-month term is not longer than one year, so § 26.01(b)(5) does not reach it. Commission-splitting between license holders appears nowhere in § 26.01(b) — the only commissions the statute of frauds covers are those at (b)(7) for an oil or gas lease, an oil or gas royalty, minerals or a mineral interest — and Occupations Code § 1101.806(a)(1) expressly excludes agreements to share compensation among license holders. A fee for finding a tenant is a real-estate commission, and Texas does require that promise to be written and signed, but by § 1101.806(c) of TRELA rather than by this statute.

Which Texas seller must deliver the § 5.008 Seller's Disclosure Notice?

• a.An executor selling the decedent's house during administration
• b.A lender selling a house it took back at a foreclosure sale
• c.An owner selling the single-family house she has lived in for years✓
• d.A builder selling a brand-new house never previously occupied

Property Code § 5.008(a): "A seller of residential real property comprising not more than one dwelling unit located in this state shall give to the purchaser of the property a written notice as prescribed by this section." Subsection (e) then lifts the duty from the other three. It does not apply to a transfer "(4) by a mortgagee or a beneficiary under a deed of trust who has acquired the real property at a sale conducted pursuant to a power of sale under a deed of trust," which covers the lender's foreclosed house; nor "(5) by a fiduciary in the course of the administration of a decedent's estate, guardianship, conservatorship, or trust," which covers the executor; nor "(10) of a new residence of not more than one dwelling unit which has not previously been occupied for residential purposes," which covers the builder. The exemptions share a logic — each of those sellers has never lived in the house. Subsection (d) adds that a seller who does not know an answer says so on the notice and "by that act is in compliance with this section."

A Texas buyer signs a contract without having received the Seller's Disclosure Notice, and the seller delivers it eleven days later. The buyer may:

• a.Terminate at any time before closing, for any reason at all
• b.Terminate only if the notice reveals a defect she did not know of
• c.Recover the earnest money only by suing the seller for the breach
• d.Terminate for any reason within seven days after receiving it✓

Property Code § 5.008(f): "The notice shall be delivered by the seller to the purchaser on or before the effective date of an executory contract binding the purchaser to purchase the property. If a contract is entered without the seller providing the notice required by this section, the purchaser may terminate the contract for any reason within seven days after receiving the notice." Paragraph 7B(2) of TREC No. 20-19 carries the same clock and adds the money: the open-ended right — terminate at any time before closing, earnest money refunded — belongs to the case where the notice never arrives at all, and it is replaced by the seven-day window once the seller delivers. The right does not depend on what the notice says, because the statute grants it "for any reason." And no suit is needed to get the deposit back: a termination inside the window refunds the earnest money under the contract's own terms.

A seller needs to remain in the house for ten days after closing. Which TREC-promulgated form covers that arrangement?

• a.Buyer's Temporary Residential Lease, TREC No. 16-7
• b.Seller's Temporary Residential Lease, TREC No. 15-7✓
• c.Addendum Regarding Residential Leases, TREC No. 51-1
• d.Amendment to Contract, TREC No. 39-11

22 TAC § 537.26 adopts by reference "standard contract form TREC No. 15-7 ... Seller's Temporary Residential Lease," which is the form for the seller staying on as a tenant after the buyer takes title. Its mirror image is adopted at § 537.27: TREC No. 16-7, the Buyer's Temporary Residential Lease, for the opposite case where the buyer occupies before closing — the two forms differ in who is the tenant, which is the whole question here. The Addendum Regarding Residential Leases, TREC No. 51-1, is adopted separately at § 537.58 and is a different instrument, not the post-closing occupancy form. And the Amendment to Contract, TREC No. 39-11, adopted at § 537.46, changes terms of the contract itself; it creates no tenancy, and occupancy by someone who is not the owner needs a lease, not an amendment.

A distinctive feature of Texas real estate practice is that license holders generally must:

• a.Draft each contract from scratch for every client
• b.Use the appropriate TREC-promulgated form✓
• c.Have every contract written by the buyer's lender
• d.Avoid using written contracts entirely

TREC promulgates standard contract forms, and Texas license holders are generally required to use the appropriate promulgated form for a transaction rather than drafting their own. Using the standard forms protects consumers and keeps licensees from practicing law, which is exactly why building a contract from scratch for each client is not open to a license holder, since original drafting of legal instruments is lawyers' work. Having the buyer's lender write the contract is no better, because the lender is one side's financing source rather than a neutral drafter of the agreement between buyer and seller. And going without written contracts would leave the parties no reliable record of their terms, the opposite of what the promulgated forms exist to provide.

When completing a TREC-promulgated contract form, a Texas license holder may:

• a.Add custom clauses that change the legal effect of the contract
• b.Give legal advice about whether the contract is enforceable
• c.Complete the blanks with the parties' agreed business terms✓
• d.Sign the contract for the client without written authority

A license holder may complete the blanks on a promulgated form to record the parties' agreed business terms but may not add clauses or draft language that changes the contract's legal effect. 22 TAC § 537.11(b) says a license holder may not "practice law," "give advice or opinions as to the legal effect of any contract forms," or "draft or recommend language to be included in a contract form defining or affecting the rights, obligations, or remedies of the principals of a real estate transaction, including escalation, appraisal, or contingency clauses." That single subsection disposes of two of the wrong answers at once: writing a custom clause and opining on enforceability are both named in it. What the rule does permit is § 537.11(c)(2), "explaining to the license holder's principals the meaning of informational items or choices in a contract form, as long as the license holder does not practice law." Signing for a client is a different failing altogether — not practicing law but acting without authority, which no license confers.

A Texas broker's supervisory role with respect to contract forms includes:

• a.Guaranteeing that none of the firm's contracts is ever disputed
• b.Checking that agents use the current promulgated forms and addenda✓
• c.Preparing a written legal opinion on each executed contract
• d.Choosing forms TREC no longer promulgates, to keep them familiar

The broker's supervisory duty includes seeing that sponsored agents use the correct current promulgated forms and addenda and that agreed changes are documented by amendment. 22 TAC § 535.2(i)(4) requires the broker's written policies to ensure each sponsored sales agent is given, before the effective date of the change, "notice of any change to the Act, Commission rules, or Commission promulgated contract forms" — which is exactly why reaching for a superseded form inverts the duty rather than satisfying it, familiarity notwithstanding. The duty is one of process, not of outcome: no broker can promise a contract will never be disputed, because disputes turn on the parties and on events after signing. And writing legal opinions on each contract would carry the broker across the line § 537.11(b)(3) draws, which forbids giving "advice or opinions as to the legal effect of any contract forms." Supervising the use of the forms is brokerage; opining on them is not.